THE boss at one of the region's last surviving coal miners has reassured workers "we have a future" despite a dramatic drop in profits and revenue.

In its interim results for the six months ended November 30, Hargreaves Services, based at Esh Winning, County Durham, reported continuing profit before tax fell to £800,000 - down 94.7 per cent on the previous year.

Underlying profit before tax fell 81.3 per cent to £4.1m and revenue halved, going from £351.2m to £174.8m.

The firm, which supplied the fuel that fired SSI's Redcar coke ovens, has been rocked by the steel crisis and uncertainty about the future of Britain's coal-fired power stations.

Last night, chief executive Gordon Banham told The Northern Echo that the firm was going through "a difficult and bumpy patch" but its transport, property, and international activities - where it provides expert advice to coal and steel producers in South Africa and across Asia - gave him grounds for optimism.

The company's UK coal production has become loss-making as a result of prices taking a sharp fall, while changes in carbon taxes and lower gas prices have reduced the demand for thermal coal used in UK power stations. In response Hargreaves will halt coal production at all but one of its seven opencast sites in Scotland over the next few months.

"What is happening is what I expected, only it is happening even quicker than we anticipated," said Mr Banham, as he praised staff for their ability to weather a very testing period.

The closure of Redcar steelworks resulted in 150 Hargreaves workers losing their jobs and a loss of £3m to £4m in annual revenue. But the firm's insistence on a cash-on-delivery arrangement protected it from incurring major losses when Thai-owned SSI UK was liquidated in October last year.

"Unlike other suppliers we did not inherit any bad debt when SSI went under," said the Hargreaves chief.

The firm continues to employ about 2,000 people and Mr Banham reassured workers the business was on a solid footing.

He added: "We are still profitable. The shareholders might not be happy and I can understand that but my immediate concern is for our people. I am positive about our future. There are a lot of good things about this business and there is no way I am going to sound negative."

Hargreaves will continue to develop its property portfolio and the recent acquisition of Colchester-based civil engineering firm Blackwells offers further opportunities to diversify away from the supply of power station coal.

Chairman David Morgan admitted the UK coal and steel sectors remain "very challenging".

He added: "Given continuing weak commodity prices, low coal demand and the announcement of further coal station closures, the board has taken the decision to reduce the group's exposure to thermal coal markets over the next eighteen months. This follows the decisive actions taken in the past eighteen months to simplify the group and exit markets such as coke production and trading."

"The recent acquisition of Blackwell represents an important strategic step and the ongoing development of value across the property portfolio continues to make further progress. The Board is also excited by the opportunities being presented to accelerate the development of its international presence in Industrial Services activities. The recent wet and mild weather has further impacted the Group's short term trading, curtailing coal production and restoration activities, however the Board is confident that profitability can be maintained even in the face of such severe market conditions. The Board has already taken significant steps in reducing costs and restructuring the Group and these efforts are ongoing."